Appriasal Guidelines for HUD-Owned Inventory

Appriasal Guidelines for HUD-Owned Inventory

Area 3A ? Illinois Area 1P ? Michigan M&M 3.7 Bridge

ALL REPORTS MUST BE IN UNIFORM DATASET APPRAISAL (UAD) FORMAT IN .PDF FILE FORMAT

WORK ORDER NOTIFICATION ? Approved appraisers will receive an emailed work order notification through K.M. Minemier & Associates' system of record (SOR). Work orders must be accepted through the platform within 24 hours of assignment. The work order notification will also include a pre-authorized invoice fee approved for the completed appraisal of the subject property.

TURNAROUND REQUIREMENTS ? Completed appraisals are required to be uploaded into KMM's SOR with attachments no later than 7 days from work order acceptance.

ACCESS ? HUD-owned homes can be accessed with a full set of HUD keys. Quick-set key codes will be supplied to appraiser by K.M. Minemier & Associates. It is appraiser responsibility to be able to access the subject property. Lock box codes may not be available. If subject property accesses through a common area door key, or a gated community, special access instructions will be provided in work order notification.

APPRAISAL COVER PAGE - Please include a cover page for all appraisal reports that includes address, appraiser name, effective date and photo of the subject property.

PAGE 1 - All information on page 1 should, as with all pages be complete and accurate. Information on page 1 should match the sketch and sales grid for the subject. Please pay particular attention to Address, Legal Description, and Parcel number. HUD/K.M. Minemier & Associates, LLC will be the listed client and the assignment type will be indicated as "Other" HUD REO Appraisal and the PUD information must be complete if needed and any further necessary comments clarifying any aspect of PUD or Condo included in the report.

? Flood Zone - If a property is noted in a FEMA Special Flood Zone area, then it must be noted in the 100 year flood plain on the ECR. Properties in a flood zone MUST contain a flood map. The report and ECR should indicate the same flood information.

? Septic/Well - Private Septic and Well systems require a comment about the system's effect (negative or not) on the subject's marketability. Location should be noted on the sketch (noted estimate is acceptable.) If location is unknown, a comment is required that includes a description of efforts made to obtain this information.

COMPARABLE SALES - Provide at least two comparable sales sold within 6 months from the effective date of appraisal. If subject is noted as declining, provide at least two comparable sales that have sold within 90 days and 2 current listings/pending. Note, over supply and over 6 month marketing times are indications of a declining market. It is acceptable to expand your search for more similar comps. Overall, use the best and most similar comparable sales available, and if it is necessary to expand parameters, please make thorough comments.

Specific comments addressing the particular comp should be used for comparables over 6 months and over 1 mile. Detailed explanation as to why it was necessary.

Explain in the sales Comparison Comments each instance of: a) any LINE ITEM adjustment in excess of 10% of the comparable sales price b) any NET adjustments in excess of 15% of the comparable sales price and c) and GROSS adjustments in excess of 25% of the comparable sales price. Refrain from using generic comments.

Use of REO comparable sales, listings and pending sales may be used to demonstrate the subject market. Please note, it is not the intent of HUD for only REO comparables to be utilized. For EVERY REO comparable utilized, the appraiser should provide a non-REO comparable, and sufficient weighting should be applied.

OPINION OF VALUE - Appraisals completed for HUD are, first and foremost, used for marketing and listing purposes only. Therefore, an opinion of value statement should be included in the additional comments section. Be sure to include how the value was derived and if comparable weighting was utilized. This comment is important as it gives K.M. Minemier & Associates, HUD, Lenders, and Buyers insight into the appraiser's valuation process. An appraised value of $100,000 with comps ranging from $80,000-110,000 without a comment is only going to cause questions and require additional information from the appraiser. Make sure to verify that the value indicated by Sales Comparison corresponds to the Final Opinion of Value, and that EVERY APPRAISAL IS INDICATED AS "AS_IS".

SALES HISTORY - Include a comment on the sales history of both the subject and the comparables. The comment should include whether the sale was a market sale, REO, short sale, etc. and the impact on the market value. Verify that the correct box is indicated for the subject and comparables.

PROPERTY CONDITION REPORT (PCR) - The appraiser must review the PCR and detail in the additional comments section or, on an attached addendum, any discrepancies and/or inconsistencies that conflict with appraiser's conclusions. Access and download of the PCR can be obtained from P260. Login credentials into P260 will be issued to appraiser by K.M. Minemier & Associates. The date of the PCR must also be referenced in the appraiser's comments. The PCR with photos must be added as an attachment and uploaded into SOR (KMM's System of Record) for each completed appraisal submission.

PCR STATEMENT - The following statement must be included in every appraisal report: (Included on MPR Addendum attached to PCR) "A property condition inspection was completed by the PCR inspector on [date]. The Property Condition Report (PCR) was provided to the appraiser by the client and is included within this appraisal. The report has been retained by the appraiser and is part of the appraiser's work file."

MECHANICAL SYSTEMS STATEMENT - The following statement must be included in every appraisal report: (Included on MPR Addendum attached to PCR) "The mechanical systems were not checked for functionality by the appraiser; however, a visual

inspection was performed. The PCR indicated that all systems were listed in satisfactory condition unless otherwise noted below. If this proves to be false, the appraiser has the right to change opinion or estimated value of this report."

INSURABILITY STATEMENT - The statement of insurability should be provided in bold type, should be worded EXACTLY as referenced in HUD 4150.2, Appendix A and refer directly to the subject property.

? INSURABLE - Properties marketed as "insurable" are those that meet FHA's Minimum Property Requirements (MPR) for existing housing and Minimum Property Standards (MPS) for new construction at the time of the appraisal in their as-is condition without repairs being necessary.

Subject property is insurable in its "as-is" state without repairs.

? INSURABLE WITH ESCROW REPAIR - A property that requires no more than $10,000 for repairs to meet FHA's MPR or MPS as estimated by the PCR and as reviewed and determined to be reasonable by the appraiser, is eligible to be marketed for sale in its "as-is" condition with FHA mortgage insurance available, provided the purchaser(s) establishes a cash escrow to ensure the completion of the required repairs. Purchaser(s) are permitted to include in the mortgage an amount equal to 110% of the estimated cost of the repairs.

Subject property is insurable in its "as-is" state with repairs costing $10,000 or less with repair escrow.

? UNINSURABLE - Properties offered for sale "Uninsured" do not meet, in their as-is condition, FHA's MPR or MPS and the cost of repairs identified by the appraiser, to meet MPR or MPS, are estimated to exceed $10,000. Uninsurable properties can qualify for FHA's Section 203(k) rehabilitation program and, depending upon the scope and extent of repairs needed, the Streamlined (k) Limited Repair Program.

Indicate one or more of the following statements as they pertain to the subject property.

? Subject property is Uninsurable due to repairs exceeding $10,000. ? Subject property is Uninsurable due to garage conversion without a permit. ? Subject property is Uninsurable due to an addition without a permit. ? Subject property is Uninsurable due to the subject's REL being under 30

years, also making the subject property ineligible for 203(k) financing. ? Subject property is Uninsurable due to the subject's project not being on

HUD's approved condominium list.

MINIMUM PROPERTY REQUIREMENTS (MPR) - Any MPR in the PCR must be discussed in the addendum and must state "according to the PCR dated..." with the date of the PCR identified. Itemize MPR items with estimated cost to cure for each item regardless of

recommended insurability. Items are to be specific with location, defect, and action required. Make sure to clearly separate MPR items from non-MPR items (Cosmetic.)

HUD REO LBP APPRAISAL REPORTING REQUIREMENTS - If observations of defective paint in a property built before 1978, in the physical deficiencies or adverse conditions section of the appraisal report, the appraiser must enter an "X" in the "Yes" box, and note all areas affected. However, if the appraiser does not observe defective paint in a home that was built before 1978, an explanation is not required in the physical deficiencies or adverse conditions section of the appraisal report. (Per Mortgagee Letter 2010-17)

1004MC-MARKET CONDITION ADDENDUM - The market trend indicated on Page 1 of the URAR must be consistent with the data on the 1004MC form. If information is unavailable or misleading, thorough comments must be made explaining research and findings. Provide supportive comments in the summary section of the 1004MC to detail all information on all boxes indicated. Make sure condominium information including a screen print from the HUD Condo look-up screen is included, if needed.

APPRAISAL PHOTO REQUIREMENTS ? All photos in the submitted appraisal report must be clear and in SOR, in appropriate viewing orientation and clearly labeled.

? All listed MPR items must be accompanied by photos with a label of MPR item. ? Any file photos used for comparables should include a comment as to the source

of the file photo and reason for its use. ? Every interior room must be photo documented in appraisal report.

APPRAISAL CERTIFICATION AND STANDARDS ? The Appraisal Certification must be provided as an attachment to the appraisal and refer directly to the subject property as referenced below.

INVOICING ? Upon timely completion of the appraisal submit appraisal invoice as an attachment and upload into the SOR. K.M. Minemier's staff will review, approve and submit for payment. Vendor invoices are processed every two weeks to ensure prompt payment of services rendered.

REPORT SUBMISSION REQUIREMENTS - Due to the number of appraisal reports and selection of appraisers, it is imperative that each and every appraiser provide their reports in the following sequence of pages.

? Appraisal Cover Page ? Report (1004, 1004C, 1073, etc.) ? Additional Comparables and Listings ? Text Addendum ? 1004MC ? Public Record ? Sketch ? Dimension Sheet (Not Applicable If Dimensions Are On Sketch)

? MPR Addendum ? All Photos of the Subject Property (Interior, Exterior And All MPR Items) ? Comparable Photos ? Maps (Location and Flood Map) ? Environmental Compliance Record (ECR) ? Inspection Sheet Photo ? Appraiser's License ? Appraiser's E & O Insurance ? Property Condition Report (PCR) ? Appraisal Invoice

ACKNOWLEDGEMENT AND AGREEMENT

This is to acknowledge that I have received, read, and understood the HUD REO APPRAISAL GUIDELINES for Area 3A - Illinois & Area 1P ? Michigan and understand that it sets forth the terms, conditions, responsibilities, and obligations with the client HUD/K.M. Minemier & Associates. I understand and agree that it is my responsibility to abide by the guidelines set forth.

__________________________________________ Date

__________________________________________ Appraiser Signature

__________________________________________ Appraiser Name [printed]

__________________________________________ Company Name

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